What is GEX (Gamma Exposure)?
Net dealer gamma vs spot — the mechanical force that dampens or amplifies every SPX move.
Definition
Gamma Exposure (GEX) is the aggregate dollar gamma of all option positions held by dealers, expressed as $-per-1%-move. Positive GEX = dealers are net long gamma → they sell rallies and buy dips → market mean-reverts intraday. Negative GEX = dealers are short gamma → they buy rallies and sell dips → moves accelerate, vol expands.
Why it matters for trading
- GEX is the single best predictor of intraday SPX behaviour. In positive-gamma regimes, range-bound mean-reversion strategies dominate; in negative-gamma regimes, breakout/momentum strategies dominate.
- The crossover point — the FLIP — is where dealer behaviour reverses. A move from GEX = +$3B to GEX = -$1B as SPX falls 30 points fundamentally changes the regime mid-session.
- GEX magnitude scales the effect. Big GEX (|>$5B|) = strong dampening or amplification; small GEX = the underlying flow dominates.